Abstract- A
history of all transactions shown in the public records affecting a
particular tract of land.
Abstract Plant- See Title Plant.
Adjustable Rate Mortgage (ARM)- Mortgage loans under which the
interest rate is periodically adjusted, in accordance with some market
indicator, to more closely coincide with the current rates. The extent
and number of these adjustments are agreed to at the inception of the
loan.
Adverse Possession- The possession, by one person, of land belonging
to another in a manner deemed adverse to the interest of the owner.
In most states, by operation of law, title to the land becomes vested
in such person after a fixed number of years if the owner fails to assert
his or her rights.
Affidavit- A written statement made under oath before a notary
public or other judicial officer.
Agreement- A legally binding contract made between two or more
persons.
ALTA (American Land Title Association)- The trade association
of the title insurance industry, which has adopted certain insurance
policy forms to standardize coverage on a national basis.
Amortization- Payment to reduce the principal of a debt in regular,
periodic installments.
Appraisal- A report from an independent third party detailing
the estimated value of real estate.
Appurtenance- A right or privilege that is a part of the ownership
of property, such as a right of way to a highway across the land of
another. Water rights are also an example.
Assessment- (1) The valuation of real estate for purpose of taxes
or special improvement charges. (2) The amount of taxes or special improvement
charges. Special improvement charges are usually for the costs of streets,
sidewalks, sewers, etc.
Assignment- (1) The act of transferring an interest, such as
a loan secured by a mortgage, from one person to another. (2) The instrument
or paper by which one person transfers such ownership to another.
Attorney's Opinion- A statement by an attorney as to the validity
of a title, arrived at after investigation of the history of the title
as recorded in the public records.
Back Title Letter- Also
called "back title certificate" in some areas, and "starter"
in others. When titles previously have been examined up to a certain
date by reliable examiners, title companies sometimes give subsequent
examiners of such titles a letter that sets forth the condition of the
title at the time of the previous examination and authorizes them to
begin their subsequent examination with the terminal date of the previous
examination.
Balloon Note- A form of promissory note that calls for the minimum
payment of principal and the payment of interest at regular intervals.
This type of note requires a substantial final payment, which represents
all the principal.
Bankruptcy- A proceeding in U.S. District Court wherein assets
of an insolvent debtor are protected and distributed in an equitable
manner.
Binder- Sometimes called "preliminary certificate"
or "commitment." (1) A preliminary report as to the condition
of a title and a commitment to issue a title insurance policy in a certain
manner when certain conditions are met. (2) A deposit in escrow of a
small part of the purchase price of real estate as evidence of good
faith and to bind an agreement to purchase.
Certificate of Title- A
certificate issued by a title examiner stating the condition of a title.
Chain- In real estate measurements (surveying), a chain is 66
feet long or 100 links, each link being 7.92 inches. The measurement
may change when used in fields other than surveying.
Chain of Title- The successive ownerships or transfers in the
history of title to a tract of land.
Claim- An adverse right or interest asserted by one party against
another or against an insurer or indemnitor. Claims may arise from unpaid
debts or taxes, as well as from hidden title defects such as fraud,
forgery, missing heirs, etc.
Clear Title- Real property ownership free of liens, defects,
encumbrances or claims.
Closing- Also called "settlement." A meeting of all
parties involved in a property transaction during which the transaction
is consummated.
Clouded Title- An irregularity, possible claim or encumbrance
that, if valid, would adversely affect or impair the title.
Coinsurance- Two or more policies of title insurance issued by
different insurers, each covering a portion of the same risk, which
together provide total coverage of the risk.
Commitment- Also called "binder." A document issued
by a title insurance company that contains the conditions under which
a policy of title insurance will be issued.
Condemnation- (1) The taking of private property for a public
purpose, with compensation to the owner under the right of eminent domain.
Governmental units, railroads and utility companies have the right to
condemn and take private property. (2) The destruction by government
of private property that imperils the life, health or safety of the
public.
Conventional Loan- A loan secured by a mortgage or deed of trust
for which the loan-to-value ratio is within an acceptable range for
a particular lending institution.
Conveyance- The transfer of title to property from one person
to another.
Covenant- A formal agreement or contract between two parties
in which one party gives the other certain promises and assurances,
such as covenants of warranty in a warranty deed.
Courtesy- A right that a husband has in his wife's property at
her death. It does not exist in all states.
Dedication- The
setting aside of certain land by the owner and declaring it to be for
public use. Examples: streets, sidewalks and parks.
Deed- A document through which a conveyance of property is effected.
Deed Restriction- A covenant contained in a deed imposing limits
on the use or occupancy of the real estate or the type, size, purpose
or location of improvements to be constructed on it.
Defect- A blemish, imperfection or deficiency. A defective title
is one that is irregular and faulty.
Depreciation- Loss in value occasioned by ordinary wear and tear,
destructive action of the elements, or functional or economic obsolescence.
Devise- A gift of real estate made by a will.
Dominant Estate- The property for the benefit of which a right-of-way
easement exists across another's adjoining piece of land is said to
be the dominant estate. The land across which the easement runs is said
to be the servient estate.
Dower- A right that a wife has in her husband's property at the
time of his death. Does not exist in all states.
Earnest Money- A
deposit of funds by the purchaser of a piece of real estate as evidence
of good faith.
Easement- A right to use all or part of the land owned by another
for a specific purpose. An easement may, for example, entitle its holder
to install and maintain sewer or utility lines.
Eminent Domain- The right of a government to take privately owned
property for public purposes under condemnation proceedings subject
to payment of its fair market value.
Encroachment- Any building, improvement or structure located
on one property (such as a wall, fence or driveway) that intrudes upon
the property of another.
Encumbrance- Any interest, right, lien or liability attached
to a parcel of land (such as unpaid taxes or an unsatisfied mortgage)
that constitutes or represents a burden or charge upon the property.
Equity- The market value of real property, less the amount of
existing liens.
Escheat- The reversion of property to the state when an owner
dies leaving no legal heirs, devisees or claimants.
Escrow- A method of closing a real estate transaction in which
all required documents and funds are placed with a third party for processing
and disbursement.
Estoppel- A legal restraint that stops or prevents a person from
contradicting or reneging on his previous position or previous assertions
or commitments.
Examination- The study of the instruments and muniments incident
to a chain of title to determine their effect and condition in order
to reach a conclusion as to the status of the title.
Exception- A provision in a title insurance binder or policy
that excludes liability for a specific title defect or an outstanding
lien or encumbrance.
Execute- To sign a legal instrument. A deed is said to be executed
when it is signed, sealed, witnessed and delivered.
Fannie Mae (FNMA)- Federal
National Mortgage Association. A private corporation dealing in the
purchase of first mortgages.
Fee Simple Deed- The absolute ownership of a parcel of land.
The highest degree of ownership that a person can have in real estate,
which gives the owner unqualified ownership and full power of disposition.
FHA (Federal Housing Administration)- A federal agency that insures
first mortgages, enabling lenders to lend a very high percentage of
the sale price.
Fixed Rate Mortgage- A mortgage having a rate of interest that
remains the same for the life of the mortgage.
Fixtures- Personal property that is attached to real property
and is legally treated as real property while it is so attached. Examples:
medicine cabinets, window blinds and chandeliers.
Foreclosure- A legal proceeding in which real estate secured
by a mortgage or deed of trust is sold to satisfy the underlying debt.
Forgery- The fraudulent signing of another's name to an instrument
such as a deed, mortgage or check.
Freddie Mac (FHLMC)- Federal Home Loan Mortgage Corporation.
A federal agency that purchases both conventional and federally insured
first mortgages from members of the Federal Reserve System and the Federal
Home Loan Bank System.
Ginnie Mae (GNMA)- Government
National Mortgage Association. A federal association working with the
FHA that offers special assistance in obtaining mortgages and purchases
mortgages in the secondary market.
Grant- To bestow or confer, with or without compensation, a gift
such as land or money by one having control or authority over the gift.
Grantee- One to whom a grant is made.
Grantor- One who makes a grant.
Hereditaments-
Any and all kinds of estates, interest and rights in real estate that
can be inherited.
Homeowners Insurance- Real estate insurance protecting against
loss caused by fire, some natural causes, vandalism, etc., depending
on the terms of the policy. Also includes coverage such as personal
liability and theft away from home.
HUD (Department of Housing and Urban Development)- The federal
department responsible for the major housing programs in the United
States.
Index-
(1) An alphabetical listing in the public records of the names of parties
to recorded real estate instruments together with the book and page
number of the record. (2) The listing in abstract and title plants of
recorded real estate instruments in groups according to land descriptions,
known as a geographic index. (3) The alphabetical listing in abstract
and title plants, by names of the parties, of all recorded instruments
that affect but do not describe particular real estate, such as judgments,
powers of attorney, wills and probate proceedings. Such indexes are
known by various names, such as "general index," "judgment
index" and "name index."
Instrument- Any written document having a legal effect.
Judgment-
The determination of a court regarding the rights of parties in an action.
A judgment of debt on a property owner can create a lien on all of that
owner's land within a certain jurisdiction.
Junior Mortgage- A mortgage lower in lien priority than another.
Leasehold-
The right to possession and use of land for a fixed period of time.
The lease is the agreement that creates the right.
Lessee- A tenant holding a leasehold.
Lessor- A landlord; one who gives a leasehold to a lessee.
License- Permission to go upon or use the land of another, the
permission being a personal privilege and not constituting an interest
in the land.
Lien- A monetary charge imposed on a property, usually arising
from some debt or obligation.
Lien Waver- Also called "waiver of liens." A waiver
of mechanics' lien rights, signed by contractors or subcontractors.
Link- In surveying, a length of 7.92 inches.
Loan Policy- Also called "mortgage policy." A title
insurance policy insuring a mortgagee, or beneficiary under a deed of
trust, against loss caused by invalidity or unenforceability of a lien,
or loss of priority of the mortgage or deed of trust.
Lis Pendens- A legal notice intending to bind third parties of
litigation claiming an interest in real estate.
Lot- Generally, any portion or parcel of real property. Usually
refers to a portion of a subdivision.
Market Value- The
average of the highest price that a buyer, willing but not compelled
to buy, would pay and the lowest price a seller, willing but not compelled
to sell, would accept.
Mechanic's Lien- A lien on real estate, created by operation
of law, that secures the payment of debts due to persons who perform
labor or services or furnish materials incident to the construction
of buildings and improvements on the real estate.
Metes and Bounds- A land description in which boundaries are
described by courses, directions, distances and monuments.
Mortgage- A conditioned pledge of property to a creditor as security
for the payment of a debt.
Mortgage Insurance- Insurance written by an independent mortgage
insurance company protecting the mortgage lender against loss incurred
by a mortgage default, thus enabling the lender to lend a higher percentage
of the sale price.
Mortgagee- The holder of a mortgage. The party to whom a mortgage
is made, generally the lender.
Mortgagee Policy- See Loan Policy.
Mortgagor- A person who mortgages property. A person who executes
a mortgage, generally the property owner.
Multiple Listing- The pooling in a central bureau of listings
of properties for sale. These listings are held individually by members
of a group of real estate brokers, with the agreement that any member
of the group may sell the properties and, in the case of a sale, the
commission will be divided between the broker making the sale and the
broker who filed the listing.
Muniments of Title- Written evidence (documents) that an owner
possesses to prove his or her title to property.
Note- Also called "promissory note." A written promise to pay a
sum of money, usually at a specified interest rate, at a stated time
to a named payee.
Owner's Policy- A policy of title insurance insuring
an owner of real estate against loss occasioned by defects in, liens
against or unmarketability of the owner's title.
Plat- Also called "plat map." A map
dividing a parcel of land into lots, as in a subdivision. A plat book
contains the plat maps for a given area.
Point- Also called "commission points" or "discount
points." One percent of the amount of the loan.
Premium- The amount payable for an insurance policy.
Prescriptive Easement- A right to use another's property that
is not inconsistent with the owner's rights and that is acquired by
an open, notorious, adverse and continuous use for the statutory period,
for example 20 years.
Principal- (1) A sum of money owed as a debt on which interest
is payable. (2) A person who empowers another to act as his representative
or agent. (3) The person having prime responsibility for an obligation
as distinguished from one who acts as a surety or endorser.
Purchase Money Mortgage- A mortgage given by a purchaser to a
seller on the subject property to secure payment of a part of the purchase
price.
Quit Claim Deed- A
deed that does not imply that the grantor holds title, but that surrenders
and gives to the grantee any possible interest or rights that the grantor
may have in the property.
Real Estate- Also called "real property." (1) Land and
anything permanently affixed to the land, such as building, fences and
those things attached to the buildings, such as light fixtures, plumbing
and heating fixtures, or other such items that would be personal property
if not attached. (2) May refer to rights in real property as well as the
property itself.
Recording- The noting in a public office of the details of a
legal document - such as a deed or mortgage - affecting the title to
real estate. When such an instrument is properly recorded, it is considered
to be a matter of public record. Legally, that means that all subsequent
purchasers are deemed to have constructive knowledge of that information.
Reinsurance- A contractual relationship between two insurance
companies under which one insurer assumes a portion of the risk of the
insurance policy written by the other.
Release- (1) To relieve from debt or security or abandon a right,
such as the release of a mortgage lien from a part or all of the land
mortgaged. (2) The instrument effecting a release.
Restrictions- Limitations on the use of property imposed or created
by deeds or other documents in the chain of title. A restriction, for
example, may prohibit the placement of trailer or the construction of
a commercial structure on the property.
Riparian Rights- The rights of owners of lands bordering watercourses
which relate to the water and its use.
Sale Agreement- A
contract entered into between a buyer and seller, setting forth the
terms, provisions and conditions of a sale of real estate.
Sale and Leaseback- The sale of an asset to a buyer who immediately
leases it back to the seller.
Search- A careful exploration and perusal of the public records
in an effort to find all recorded instruments relating to a particular
chain of title.
Second Mortgage- A mortgage ranking in priority immediately below
a first mortgage.
Subordination- The act or process by which a person's rights
are ranked below the rights of others. For example, a second mortgagee's
rights are subordinate to those of the first mortgagee.
Surety- (1) A person who agrees to be responsible for a debt
or obligation of another. (2) The pledge or agreement by which one undertakes
responsibility for the debt or obligation of another.
Title-
(1) A combination of all the elements that constitute the highest legal
right to own, possess, use, control, enjoy and dispose of real estate
or an inheritable right or interest therein. (2) The rights of ownership
recognized and protected by the law.
Title Covenants- Covenants ordinarily inserted in conveyances
and in transfers of title to real estate for the purpose of giving protection
to the purchaser against possible insufficiency of the title received.
A group of such covenants known as "common law covenants"
includes: covenants against encumbrances; covenants for further assurance
(in other words, to do whatever is necessary to rectify title deficiencies);
covenants of good right and authority to convey; covenants of quiet
enjoyment; covenants of seisin; covenants of warranty. (See Warranty
or Covenant.)
Title Defect- (1) Any possible or patent claim or right outstanding
in a chain of title that is adverse to the claim of ownership. (2) Any
material irregularity in the execution or effect of an instrument in
the chain of title.
Title Insurance Policy- A contract of title insurance under which
the insurer, in keeping with the terms of the policy, agrees to indemnify
the insured against loss arising from claims against the insured interest.
Title Plant- Also called "abstract plant" in some areas.
A geographically filed assemblage of title information that helps in
expediting title examinations, such as copies of previous attorneys'
opinions, abstracts, tax searches and copies or take-offs of the public
records.
Underwriter- An
insurance company that issues insurance policies to the public or to
another insurer.
Variable Interest Rate- Also called "flexible
interest rate." An interest rate that fluctuates as the prevailing
rate moves up or down. In mortgages, there are usually maximums as to
the frequency and amount of fluctuation.
Veterans Administration (VA) Loans- Housing loans to veterans
by banks, savings and loans, or other lenders that are guaranteed by
the Veterans Administration, enabling veterans to buy a residence with
little or no down payment.
Waiver- The voluntary and intentional relinquishment
of a known right, claim or privilege.
Warranty- In a broad sense, an agreement or undertaking by a
seller to be responsible for present or future losses of the purchaser
occasioned by deficiency or defect in the quality, condition or quantity
of the thing sold. In a stricter sense, the provision or provisions
in a deed, lease or other instrument conveying or transferring an estate
or interest in real estate under which the seller becomes liable to
the purchaser for defects in or encumbrances on the title. (See Title
Covenants.)
Will- A testamentary disposition of property, usually in a form
prescribed by law, that takes effect upon death.
Zoning- Laws passed by local governments regulating
the size, type, structure, nature and use of land or buildings.
